Correlation Between Esperion Therapeutics and Akero Therapeutics
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Akero Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Esperion Therapeutics and Akero Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and Akero Therapeutics, you can compare the effects of market volatilities on Esperion Therapeutics and Akero Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Esperion Therapeutics with a short position of Akero Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Akero Therapeutics.
Diversification Opportunities for Esperion Therapeutics and Akero Therapeutics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Esperion and Akero is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Akero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akero Therapeutics and Esperion Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Esperion Therapeutics are associated (or correlated) with Akero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akero Therapeutics has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Akero Therapeutics go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and Akero Therapeutics
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.54 times more return on investment than Akero Therapeutics. However, Esperion Therapeutics is 1.54 times more volatile than Akero Therapeutics. It trades about 0.16 of its potential returns per unit of risk. Akero Therapeutics is currently generating about 0.12 per unit of risk. If you would invest 183.00 in Esperion Therapeutics on September 2, 2024 and sell it today you would earn a total of 97.00 from holding Esperion Therapeutics or generate 53.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esperion Therapeutics vs. Akero Therapeutics
Performance |
| Timeline |
| Esperion Therapeutics |
| Akero Therapeutics |
Esperion Therapeutics and Akero Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and Akero Therapeutics
The main advantage of trading using opposite Esperion Therapeutics and Akero Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Akero Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Akero Therapeutics will offset losses from the drop in Akero Therapeutics' long position.| Esperion Therapeutics vs. Elanco Animal Health | Esperion Therapeutics vs. SIGA Technologies | Esperion Therapeutics vs. Catalent | Esperion Therapeutics vs. ANI Pharmaceuticals |
| Akero Therapeutics vs. Terns Pharmaceuticals | Akero Therapeutics vs. Madrigal Pharmaceuticals | Akero Therapeutics vs. Inozyme Pharma | Akero Therapeutics vs. Viking Therapeutics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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